CONGO/B: MEETING WITH NEW FINANCE MINISTER, PLANS

C O N F I D E N T I A L SECTION 01 OF 02 KINSHASA 000172

SIPDIS

PARIS FOR AFRICA WATCHER
FROM BRAZZAVILLE EMBASSY OFFICE

E.O. 12958: DECL: 02/01/2010
TAGS: PGOV PREL ECON CFED IMF
SUBJECT: CONGO/B: MEETING WITH NEW FINANCE MINISTER, PLANS
TO HOLD LINE ON IMF MEASURES DESPITE POLITICAL PRESSURE

REF: KINSHASA 089

Classified By: Ambassador Robin R. Sanders for Reasons 1.4 (b) and (d)

(C) 1. Summary: Ambassador met with Congo/B,s new Finance
Minister, Pacifique Issoibeka, January 24, to assess his
commitment to keeping the country on track regarding arrears
payments, bilateral debt payments, and the IMF PRGF program.
Issoibeka had just come from a grueling session with the
National Assembly (televised),and was tired and a bit
overwhelmed. He began by seeking continued support from the
U.S. for Congo,s economic reform. He lauded the previous
Finance Minister,s very hard work (he also said this before
Parliament),and admitted that he was unsure how the country
was going to manage the arrears payments, but emphasized that
he was committed to finding a way and moving the country
forward in this regard. The new Finance Minister added that
he has only been able to absorb roughly a quarter of the
portfolio, and is trying to take on the hardest parts
piecemeal in order not to get overwhelmed given the enormous
task at hand. Issoibeka added that he is in regular contact
with outgoing Finance Minister Andely and is receiving
continual briefings on each aspect of the country,s
problematic economic portfolio one section at a time until he
has the entire dossier under better control. End Summary

(C) 2. The Ambassador began by again congratulating
Issoibeka on his new post. She reviewed issues previously
discussed (reftel) such as not letting any of the PRGF balls
drop and that the onus to regain credibility lost by changing
Finance Ministers at the beginning of the PRGF program rests
squarely on his and the President,s shoulders. Issoibeka
said he understood this and would travel to Washington in
late February or early March 2005 to reassure the IFIs that
he will push his country to remain committed to promises made
to the IMF, international donors, and bilateral partners. He
said that there is still resistance to IMF measures in some
quarters of government as he had to tell Parliamentarians
that they could not arbitrarily increase their budget (which
they tried to do). (Note: During the televised session with
the National Assembly and Senate, Issoibeka likened the IMF
program to a doctor,s prescription, and said that Congo was
an ill patient that could only improve its economic health by
adhering to the doctor,s prescription. End Note)

(C) 3. Ambassador then asked if Congo would be able to meet
payments due in January 2005 to Paris Club and others. The
Finance Minister said he did not know. He said that Congo
had about USD 20 million of the USD 34 million due (as of
January 24),and that they were short about USD 14 million.
Ambassador stressed that paying late would send additional
jitters through the IFIs partners and among other creditors
since there was already disquiet after the change in Finance
Minister. Issoibeka said he was doing his best to ensure
timely payments, but could not promise that he would meet all
the deadlines. However, even if he did not, he would continue
to work to find the money that was owed even if the payments
came late. Ambassador noted again that late payments would
again put Congo in a bad light and roll back the few gains on
its image that were a result of getting on a PRGF. We
discussed briefly the "learning curve" of ensuring that all
members of Government recognized that the PRGF is a fluid,
not static program and that measures, oil and forestry sector
audits, and deadlines must still be met in order to remain on
the program. (Note: During the televised Parliamentary
sessions, Issoibeka gave the Cameroon example of having to
start over after falling off its PRGF program. There was an
audible gasp in the room. End Note)

(C) 4. Issoibeka said that President Sassou was still
strongly committed to the IMF program and that his
instructions were to ensure that Congo progressed on IMF
measures and remained on the program. In a related
conversation with Sassou,s daughter and close advisor,
Claudia Lemoumba Sassou-Nguesso January 20, she noted her
father,s continued strong commitment to seeing economic
reforms through. She added that she hoped the IFIs would
"give Issoibeka a chance and Congo the benefit of the doubt
during this transition period between Finance Ministers." In
response to that, Ambassador said that Congo was given the
"benefit of the doubt in December 2004, and it will be
difficult for the international financial community to do so
again - so arrearages, audits, and payments will need to be
met on time. The ball is in Congo,s court to prove that it
can measure up." Although Madame Lemoumba did not like the
comment and thought the reaction by the donor community to
the removal of Andely unfair, she took it on board, and in
her usual style, Post is sure she will pass this back to her
father.
(C) 5. Comment: The first IMF review is scheduled for early
March, and we will need to see how Congo performs to
determine not only whether things are on course, but if there
have been any tangible roll backs on the gains achieved
leading up to the December 2004 IMF Board vote. As for
Issoibeka, he seems more than technically capable of doing
the job, clearly sees how severe the country,s economic
problems are, and wants the PRGF program to be successful.
What appears to be lacking is the energy level for the task
at hand, and the capacity to manage the political battles
that are surely ahead. In comparing notes between the
Ambassador,s meeting and the World Bank Rep,s meeting that
followed two days later, there was a similarity of thought
and concern about Issoibeka,s ability to have the stamina
(he nodded off in both meetings),not only for the enormity
of the technical portfolio, but the ability to stand up to
and block the hardliners (reftel) who may see this is an
opportunity to get their hands back in the till. Former
Finance Minister Andely,s had made all the hardliners tow
the economic transparency line, which in the end cost him his
job.

*U) 6. Brazzaville Embassy Office - Sanders
MEECE